Intel earnings drag down Wall Street session

Published
7:00 pm EST, Wednesday, January 16, 2008

NEW YORK -- Wall Street staggered through another volatile session Wednesday, finally closing mostly lower after a Federal Reserve report showed some economic growth at the end of 2007 and after Intel Corp.'s disappointing profit report.

Stocks gave up a modest rally in the final 20 minutes of trading, continuing the fluctuations seen throughout the session as investors combed corporate profit reports and economic news that supported varying views about the soundness of the economy.

Stocks initially gained after the Fed report -- its Beige Book survey of regional economies -- suggested economic activity increased modestly from mid-November through December, though at a slower pace than in a previous survey.

The report seemed to quell some concerns about prospects for the economy that took on fresh urgency after Intel Corp. issued disappointing earnings after the closing bell Tuesday.

The Fed's report bolstered enthusiasm among bullish investors who pointed to better-than-expected results from JPMorgan Chase & Co. and Wells Fargo & Co. The banks' reports appeared to remind Wall Street that while the fallout of souring loans was widespread, it wasn't necessarily evenly felt. And buyout news in the tech sector also gave a boost to sentiment.

"I think the market is trying to find some kind of a correction point," said Subodh Kumar, global investment strategist at Subodh Kumar & Assoc. in Toronto. "The talk on Wall Street has been about recession. Maybe the Beige Book has underscored that the U.S. is in a slowdown but that it doesn't look like precipitous one."

According to preliminary calculations, the Dow Jones industrial average fell 34.95, or 0.28 percent, to 12,466.16.

Investors remained edgy Wednesday, particularly after a drop Tuesday that took the Dow down nearly 280 points. Predictions by some economists that a recession is at hand have rattled Wall Street in recent weeks.

Intel was by far the biggest decliner among the 30 stocks that make up the Dow and also weighed on the tech-dominated Nasdaq. The chip maker fell 70 cents, or 12.4 percent, to $19.88.

Intel's failure to meet forecasts for the fourth quarter, along with first-quarter projections that came in at the low end of analysts' predictions, weighed on technology stocks. Earlier this week, there was market speculation that the technology sector, which sometimes benefits from a weak dollar and overseas strength, might be able to better withstand an economic slowdown in the U.S.

The tech arena did see some cheer, thanks to Oracle Corp.'s deal to buy BEA Systems Inc. for about $7.85 billion.

JPMorgan offered a first-quarter earnings report that revealed relatively light exposure to the faltering subprime loans as it booked a write-down of $1.3 billion, which was smaller than the massive losses of peers like Citigroup Inc. Citi on Tuesday said it swung to a loss of nearly $10 billion in the fourth quarter after booking a write-down of $18.1 billion for bad bets tied to the mortgage industry.

Wells Fargo revealed its first decline in profits in more than six years and also cited rising losses on home equity loans. But the company, one of the nation's largest banks, largely sidestepped the write-downs that many other banks have been forced to make.